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Loans
 9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Loans
Loans

Classes of loans are as follows:

 
September 30,
2019
 
December 31,
2018
 
(Amounts In Thousands)
Agricultural
$
91,621

 
$
92,673

Commercial and financial
219,362

 
229,501

Real estate:
 
 
 
Construction, 1 to 4 family residential
80,969

 
72,279

Construction, land development and commercial
108,662

 
113,807

Mortgage, farmland
237,513

 
236,454

Mortgage, 1 to 4 family first liens
913,206

 
912,059

Mortgage, 1 to 4 family junior liens
149,969

 
152,625

Mortgage, multi-family
350,378

 
352,434

Mortgage, commercial
401,615

 
383,314

Loans to individuals
32,613

 
30,072

Obligations of state and political subdivisions
52,030

 
52,725

 
$
2,637,938

 
$
2,627,943

Net unamortized fees and costs
943

 
952

 
$
2,638,881

 
$
2,628,895

Less allowance for loan losses
35,570

 
37,810

 
$
2,603,311

 
$
2,591,085



Changes in the allowance for loan losses, the allowance for loan losses applicable to impaired loans and the related loan balance of impaired loans for the three and nine months ended September 30, 2019 were as follows:

 
Three Months Ended September 30, 2019
 
Agricultural
 
Commercial and
Financial
 
Real Estate:
Construction and
land development
 
Real Estate:
Mortgage,
farmland
 
Real Estate:
Mortgage, 1 to 4
family
 
Real Estate:
Mortgage, multi-
family and
commercial
 
Other
 
Total
 
(Amounts In Thousands)
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,535

 
$
5,603

 
$
2,646

 
$
3,891

 
$
11,384

 
$
8,194

 
$
1,397

 
$
35,650

Charge-offs
(135
)
 
(177
)
 
—

 
—

 
(332
)
 
—

 
(92
)
 
(736
)
Recoveries
18

 
128

 
2

 
—

 
317

 
12

 
35

 
512

Provision
288

 
(143
)
 
240

 
96

 
(166
)
 
(110
)
 
(61
)
 
144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
2,706

 
$
5,411

 
$
2,888

 
$
3,987

 
$
11,203

 
$
8,096

 
$
1,279

 
$
35,570



Nine Months Ended September 30, 2019
 
Agricultural
 
Commercial and
Financial
 
Real Estate:
Construction and
land development
 
Real Estate:
Mortgage,
farmland
 
Real Estate:
Mortgage, 1 to 4
family
 
Real Estate:
Mortgage, multi-
family and
commercial
 
Other
 
Total
 
(Amounts In Thousands)
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,789

 
$
5,826

 
$
3,292

 
$
3,972

 
$
12,516

 
$
8,165

 
$
1,250

 
$
37,810

Charge-offs
(135
)
 
(641
)
 
(9
)
 
—

 
(711
)
 
(133
)
 
(326
)
 
(1,955
)
Recoveries
87

 
451

 
6

 
5

 
576

 
100

 
132

 
1,357

Provision
(35
)
 
(225
)
 
(401
)
 
10

 
(1,178
)
 
(36
)
 
223

 
(1,642
)
 


 


 


 


 


 


 


 


Ending balance
$
2,706

 
$
5,411

 
$
2,888

 
$
3,987

 
$
11,203

 
$
8,096

 
$
1,279

 
$
35,570

 

 

 

 

 

 

 

 

Ending balance, individually evaluated for impairment
$
341

 
$
1,008

 
$
—

 
$
—

 
$
65

 
$
1

 
$
2

 
$
1,417

 

 

 

 

 

 

 

 

Ending balance, collectively evaluated for impairment
$
2,365

 
$
4,403

 
$
2,888

 
$
3,987

 
$
11,138

 
$
8,095

 
$
1,277

 
$
34,153

 


 


 


 


 


 


 


 


Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
91,621

 
$
219,362

 
$
189,631

 
$
237,513

 
$
1,063,175

 
$
751,993

 
$
84,643

 
$
2,637,938

 


 


 


 


 


 


 


 


Ending balance, individually evaluated for impairment
$
1,865

 
$
3,176

 
$
456

 
$
4,117

 
$
7,729

 
$
2,043

 
$
2

 
$
19,388

 

 

 

 

 

 

 

 

Ending balance, collectively evaluated for impairment
$
89,756

 
$
216,186

 
$
189,175

 
$
233,396

 
$
1,055,446

 
$
749,950

 
$
84,641

 
$
2,618,550

Changes in the allowance for loan losses for the three and nine months ended September 30, 2018 were as follows:

 
Three Months Ended September 30, 2018
 
Agricultural
 
Commercial and
Financial
 
Real Estate:
Construction and
land development
 
Real Estate:
Mortgage,
farmland
 
Real Estate:
Mortgage, 1 to 4
family
 
Real Estate:
Mortgage, multi-
family and
commercial
 
Other
 
Total
 
(Amounts In Thousands)
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,071

 
$
5,040

 
$
3,054

 
$
3,475

 
$
8,902

 
$
5,697

 
$
1,271

 
$
29,510

Charge-offs
(68
)
 
(241
)
 
—

 
—

 
(280
)
 
(107
)
 
(197
)
 
(893
)
Recoveries
74

 
415

 
2

 
10

 
187

 
80

 
32

 
800

Provision
(47
)
 
(133
)
 
(188
)
 
50

 
1,756

 
193

 
(38
)
 
1,593

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
2,030

 
$
5,081

 
$
2,868

 
$
3,535

 
$
10,565

 
$
5,863

 
$
1,068

 
$
31,010



 
Nine Months Ended September 30, 2018
 
Agricultural
 
Commercial and
Financial
 
Real Estate:
Construction and
land development
 
Real Estate:
Mortgage,
farmland
 
Real Estate:
Mortgage,
1 to 4 family
 
Real Estate:
Mortgage, multi-
family and
commercial
 
Other
 
Total
 
(Amounts In Thousands)
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,294

 
$
4,837

 
$
2,989

 
$
3,669

 
$
8,668

 
$
5,700

 
$
1,243

 
$
29,400

Charge-offs
(72
)
 
(447
)
 
—

 
—

 
(607
)
 
(161
)
 
(420
)
 
(1,707
)
Recoveries
102

 
856

 
147

 
29

 
433

 
97

 
114

 
1,778

Provision
(294
)
 
(165
)
 
(268
)
 
(163
)
 
2,071

 
227

 
131

 
1,539

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
2,030

 
$
5,081

 
$
2,868

 
$
3,535

 
$
10,565

 
$
5,863

 
$
1,068

 
$
31,010

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance, individually evaluated for impairment
$
118

 
$
1,165

 
$
3

 
$
—

 
$
91

 
$
40

 
$
48

 
$
1,465

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance, collectively evaluated for impairment
$
1,912

 
$
3,916

 
$
2,865

 
$
3,535

 
$
10,474

 
$
5,823

 
$
1,020

 
$
29,545

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
79,155

 
$
214,681

 
$
171,944

 
$
230,032

 
$
1,049,249

 
$
729,626

 
$
81,095

 
$
2,555,782

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance, individually evaluated for impairment
$
2,342

 
$
3,288

 
$
927

 
$
3,729

 
$
6,728

 
$
8,217

 
$
48

 
$
25,279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance, collectively evaluated for impairment
$
76,813

 
$
211,393

 
$
171,017

 
$
226,303

 
$
1,042,521

 
$
721,409

 
$
81,047

 
$
2,530,503


The following table presents the credit quality indicators by type of loans in each category as of September 30, 2019 and December 31, 2018, respectively (amounts in thousands):

 
Agricultural
 
Commercial and
Financial
 
Real Estate:
Construction, 1 to 4
family residential
 
Real Estate:
Construction, land
development and
commercial
September 30, 2019
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
Excellent
$
3,484

 
$
3,078

 
$
—

 
$
194

Good
12,754

 
40,411

 
8,071

 
24,959

Satisfactory
42,257

 
120,698

 
55,490

 
41,622

Monitor
26,226

 
44,518

 
14,856

 
33,714

Special Mention
2,700

 
7,069

 
2,552

 
7,539

Substandard
4,200

 
3,588

 
—

 
634

Total
$
91,621

 
$
219,362

 
$
80,969

 
$
108,662


 
Real Estate:
Mortgage,
farmland
 
Real Estate:
Mortgage, 1 to 4
family first liens
 
Real Estate: Mortgage,
1 to 4 family junior
liens
 
Real Estate:
Mortgage, multi-
family
September 30, 2019
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
Excellent
$
6,268

 
$
1,859

 
$
607

 
$
21,016

Good
40,387

 
33,034

 
4,014

 
49,684

Satisfactory
131,790

 
752,092

 
136,188

 
187,940

Monitor
48,244

 
100,469

 
6,070

 
57,945

Special Mention
3,056

 
9,111

 
1,455

 
27,729

Substandard
7,768

 
16,641

 
1,635

 
6,064

Total
$
237,513

 
$
913,206

 
$
149,969

 
$
350,378


 
Real Estate:
Mortgage,
commercial
 
Loans to
individuals
 
Obligations of state and
political subdivisions
 
Total
September 30, 2019
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
Excellent
$
34,016

 
$
—

 
$
7,652

 
$
78,174

Good
81,831

 
224

 
16,438

 
311,807

Satisfactory
193,035

 
31,635

 
20,128

 
1,712,875

Monitor
82,657

 
560

 
7,416

 
422,675

Special Mention
6,122

 
172

 
396

 
67,901

Substandard
3,954

 
22

 
—

 
44,506

Total
$
401,615

 
$
32,613

 
$
52,030

 
$
2,637,938

 
 
Agricultural
 
Commercial and
Financial
 
Real Estate:
Construction, 1 to 4
family residential
 
Real Estate:
Construction, land
development and
commercial
December 31, 2018
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
Excellent
$
3,667

 
$
3,322

 
$
—

 
$
209

Good
15,342

 
51,562

 
13,029

 
16,667

Satisfactory
39,897

 
121,759

 
42,043

 
68,123

Monitor
27,510

 
35,897

 
15,045

 
19,888

Special Mention
647

 
11,418

 
1,767

 
7,635

Substandard
5,610

 
5,543

 
395

 
1,285

Total
$
92,673

 
$
229,501

 
$
72,279

 
$
113,807


 
Real Estate:
Mortgage,
farmland
 
Real Estate:
Mortgage, 1 to 4
family first liens
 
Real Estate: Mortgage,
1 to 4 family junior
liens
 
Real Estate:
Mortgage, multi-
family
December 31, 2018
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
Excellent
$
5,619

 
$
2,715

 
$
520

 
$
22,058

Good
52,364

 
33,134

 
4,569

 
60,047

Satisfactory
126,706

 
752,473

 
138,533

 
187,641

Monitor
41,486

 
96,187

 
6,242

 
60,398

Special Mention
1,055

 
10,439

 
1,130

 
16,065

Substandard
9,224

 
17,111

 
1,631

 
6,225

Total
$
236,454

 
$
912,059

 
$
152,625

 
$
352,434


 
Real Estate:
Mortgage,
commercial
 
Loans to
individuals
 
Obligations of state and
political subdivisions
 
Total
December 31, 2018
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
Excellent
$
34,096

 
$
—

 
$
8,117

 
$
80,323

Good
86,453

 
315

 
15,652

 
349,134

Satisfactory
177,271

 
28,797

 
20,685

 
1,703,928

Monitor
74,990

 
647

 
8,271

 
386,561

Special Mention
3,228

 
217

 
—

 
53,601

Substandard
7,276

 
96

 
—

 
54,396

Total
$
383,314

 
$
30,072

 
$
52,725

 
$
2,627,943



The below are descriptions of the credit quality indicators:

Excellent – Excellent rated loans are prime quality loans covered by highly liquid collateral with generous margins or supported by superior current financial conditions reflecting substantial net worth, relative to total credit extended, and based on assets of a stable and non-speculative nature whose values can be readily verified. Identified repayment source or cash flow is abundant and assured.

Good – Good rated loans are adequately secured by readily marketable collateral or good financial condition characterized by liquidity, flexibility and sound net worth. Loans are supported by sound primary and secondary payment sources and timely and accurate financial information.

Satisfactory – Satisfactory rated loans are loans to borrowers of average financial means not especially vulnerable to changes in economic or other circumstances, where the major support for the extension is sufficient collateral of a marketable nature, and the primary source of repayment is seen to be clear and adequate.

Monitor – Monitor rated loans are identified by management as warranting special attention for a variety of reasons that may bear on ultimate collectability. This may be due to adverse trends, a particular industry, loan structure, or repayment that is dependent on projections, or a one-time occurrence.

Special Mention – Special mention rated loans are supported by a marginal payment capacity and are marginally protected by collateral.  There are identified weaknesses that if not monitored and corrected may adversely affect the Company’s credit position.  A special mention credit would typically have a weakness in one of the general categories (cash flow, collateral position or payment history) but not in all categories.

Substandard – Substandard loans are not adequately supported by the paying capacity of the borrower and may be inadequately collateralized.  These loans have a well-defined weakness or weaknesses.  For these loans, it is more probable than not that the Company could sustain some loss if the deficiency(ies) is not corrected.




Past due loans as of September 30, 2019 and December 31, 2018 were as follows:

 
30 - 59 Days
Past Due
 
60 - 89 Days
Past Due
 
90 Days
or More
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
Receivable
 
Accruing Loans
Past Due 90
Days or More
 
(Amounts In Thousands)
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural
$
1,438

 
$
246

 
$
—

 
$
1,684

 
$
89,937

 
$
91,621

 
$
—

Commercial and financial
271

 
200

 
103

 
574

 
218,788

 
219,362

 
102

Real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction, 1 to 4 family residential
1,109

 
438

 
—

 
1,547

 
79,422

 
80,969

 
—

Construction, land development and commercial
1,041

 
—

 
33

 
1,074

 
107,588

 
108,662

 
—

Mortgage, farmland
964

 
406

 
—

 
1,370

 
236,143

 
237,513

 
—

Mortgage, 1 to 4 family first liens
973

 
2,874

 
3,276

 
7,123

 
906,083

 
913,206

 
641

Mortgage, 1 to 4 family junior liens
430

 
133

 
61

 
624

 
149,345

 
149,969

 
61

Mortgage, multi-family
—

 
101

 
—

 
101

 
350,277

 
350,378

 
—

Mortgage, commercial
598

 
276

 
182

 
1,056

 
400,559

 
401,615

 
—

Loans to individuals
144

 
30

 
3

 
177

 
32,436

 
32,613

 
—

Obligations of state and political subdivisions
—

 
—

 
—

 
—

 
52,030

 
52,030

 
—

 
$
6,968

 
$
4,704

 
$
3,658

 
$
15,330

 
$
2,622,608

 
$
2,637,938

 
$
804

 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 

 
 

 
 

 
 

 
 

 
 

 
 

Agricultural
$
1,026

 
$
—

 
$
135

 
$
1,161

 
$
91,512

 
$
92,673

 
$
—

Commercial and financial
988

 
459

 
225

 
1,672

 
227,829

 
229,501

 
—

Real estate:
 
 
 
 
 
 
 

 
 
 
 

 
 

Construction, 1 to 4 family residential
—

 
—

 
212

 
212

 
72,067

 
72,279

 
212

Construction, land development and commercial
233

 
202

 
—

 
435

 
113,372

 
113,807

 
—

Mortgage, farmland
193

 
388

 
—

 
581

 
235,873

 
236,454

 
—

Mortgage, 1 to 4 family first liens
3,972

 
833

 
3,234

 
8,039

 
904,020

 
912,059

 
158

Mortgage, 1 to 4 family junior liens
199

 
36

 
—

 
235

 
152,390

 
152,625

 
—

Mortgage, multi-family
—

 
—

 
—

 
—

 
352,434

 
352,434

 
—

Mortgage, commercial
733

 
344

 
—

 
1,077

 
382,237

 
383,314

 
—

Loans to individuals
195

 
—

 
22

 
217

 
29,855

 
30,072

 
—

Obligations of state and political subdivisions
—

 
—

 
—

 
—

 
52,725

 
52,725

 
—

 
$
7,539

 
$
2,262

 
$
3,828

 
$
13,629

 
$
2,614,314

 
$
2,627,943

 
$
370


 
The Company does not have a material amount of loans that are past due less than 90 days where there are serious doubts as to the ability of the borrowers to comply with the loan repayment terms.

Certain impaired loan information by loan type at September 30, 2019 and December 31, 2018, was as follows:

 
September 30, 2019
 
December 31, 2018
 
Non-accrual
loans (1)
 
Accruing loans
past due 90 days
or more
 
TDR loans
 
Non-
accrual
loans (1)
 
Accruing loans
past due 90 days
or more
 
TDR loans
 
(Amounts In Thousands)
 
(Amounts In Thousands)
Agricultural
$
1,114

 
$
—

 
$
543

 
$
1,338

 
$
—

 
$
120

Commercial and financial
820

 
102

 
2,053

 
1,476

 
—

 
2,686

Real estate:
 

 
 

 
 

 
 

 
 

 
 

Construction, 1 to 4 family residential
—

 
—

 
—

 
—

 
212

 
—

Construction, land development and commercial
33

 
—

 
323

 
—

 
—

 
328

Mortgage, farmland
986

 
—

 
3,131

 
1,062

 
—

 
3,301

Mortgage, 1 to 4 family first liens
6,093

 
641

 
1,011

 
5,799

 
158

 
1,143

Mortgage, 1 to 4 family junior liens
—

 
61

 
24

 
—

 
—

 
24

Mortgage, multi-family
101

 
—

 
—

 
145

 
—

 
—

Mortgage, commercial
1,039

 
—

 
903

 
1,009

 
—

 
937

 
$
10,186

 
$
804

 
$
7,988

 
$
10,829

 
$
370

 
$
8,539


(1)
There were $4.03 million and $4.84 million of TDR loans included within nonaccrual loans as of September 30, 2019 and December 31, 2018, respectively.

Loans 90 days or more past due that are still accruing interest increased $0.43 million from December 31, 2018 to September 30, 2019 due to an increase in the number of accruing loans past due 90 days or more. As of September 30, 2019 there were 9 accruing loans past due 90 days or more. The average accruing loans past due as of September 30, 2019 are $0.09 million. There were 2 accruing loans past due 90 days or more as of December 31, 2018 and the average loan balance was $0.19 million. The accruing loans past due 90 days or more balances are believed to be adequately collateralized and the Company expects to collect all principal and interest as contractually due under these loans.
 
The Company may modify the terms of a loan to maximize the collection of amounts due.  Such a modification is considered a troubled debt restructuring (“TDR”).  In most cases, the modification is either a reduction in interest rate, conversion to interest only payments or an extension of the maturity date.  The borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term, so a concessionary modification is granted to the borrower that would otherwise not be considered.  TDR loans accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles.

Below is a summary of information for TDR loans as of September 30, 2019 and December 31, 2018:

 
September 30, 2019
 
December 31, 2018
 
Number
of
contracts
 
Recorded
investment
 
Commitments
outstanding
 
Number
of
contracts
 
Recorded
investment
 
Commitments
outstanding
 
 
 
(Amounts In Thousands)
 
 
 
(Amounts In Thousands)
Agricultural
9

 
$
1,657

 
$
3

 
5

 
$
1,316

 
$
91

Commercial and financial
15

 
2,703

 
95

 
13

 
3,867

 
75

Real estate:
 
 
 
 
 
 
 
 
 
 
 
Construction, 1 to 4 family residential
—

 
—

 
—

 
—

 
—

 
—

Construction, land development and commercial
2

 
323

 
—

 
2

 
328

 
—

Mortgage, farmland
8

 
4,049

 
—

 
8

 
4,291

 
—

Mortgage, 1 to 4 family first liens
14

 
1,535

 
—

 
16

 
1,710

 
—

Mortgage, 1 to 4 family junior liens
1

 
24

 
—

 
1

 
24

 
—

Mortgage, multi-family
—

 
—

 
—

 
—

 
—

 
—

Mortgage, commercial
8

 
1,724

 
—

 
9

 
1,839

 
—

Loans to individuals
—

 
—

 
—

 
—

 
—

 
—

 
57

 
$
12,015

 
$
98

 
54

 
$
13,375

 
$
166


The following is a summary of TDR loans that were modified during the three and nine months ended September 30, 2019:
 
Three Months Ended September 30, 2019
Nine Months Ended September 30, 2019
 
Number
of
contracts
 
Pre-modification
recorded
investment
 
Post-modification
recorded
investment
Number
of
contracts
 
Pre-modification
recorded
investment
 
Post-modification
recorded
investment
 
 
 
(Amounts In Thousands)
 
 
 
Agricultural
—

 
$
—

 
$
—

4

 
$
574

 
$
574

Commercial and financial
—

 
—

 
—

3

 
303

 
303

Real estate:
 

 
 

 
 

 

 
 

 
 
Construction, 1 to 4 family residential
—

 
—

 
—

—

 
—

 
—

Construction, land development and commercial
—

 
—

 
—

—

 
—

 
—

Mortgage, farmland
—

 
—

 
—

1

 
620

 
620

Mortgage, 1 to 4 family first lien
—

 
—

 
—

—

 
—

 
—

Mortgage, 1 to 4 family junior liens
—

 
—

 
—

—

 
—

 
—

Mortgage, multi-family
—

 
—

 
—

—

 
—

 
—

Mortgage, commercial
—

 
—

 
—

—

 
—

 
—

 
—

 
$
—

 
$
—

8

 
$
1,497

 
$
1,497


The Company had commitments to lend $0.10 million in additional borrowings to restructured loan customers as of September 30, 2019.  The Company had commitments to lend $0.17 million in additional borrowings to restructured loan customers as of December 31, 2018.  These commitments were in the normal course of business.  The additional borrowings were not used to facilitate payments on these loans.

There were no TDR loans that were in payment default (defined as past due 90 days or more) during the period ended September 30, 2019 and none for the year ended December 31, 2018.




Information regarding impaired loans as of and for the three and nine months ended September 30, 2019 is as follows:
 
September 30, 2019
 
Three Months Ended
September 30, 2019
Nine Months Ended September 30, 2019
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average Recorded
Investment
 
Interest Income
Recognized
Average Recorded
Investment
 
Interest Income
Recognized
With no related allowance recorded:
(Amounts In Thousands)
 
 
 
Agricultural
$
1,524

 
$
2,007

 
$
—

 
$
1,535

 
$
1

$
1,611

 
$
4

Commercial and financial
1,541

 
2,702

 
—

 
1,875

 
15

2,151

 
51

Real estate:
 

 
 

 
 

 
 

 
 
 

 
 

Construction, 1 to 4 family residential
101

 
144

 
—

 
101

 
—

106

 
—

Construction, land development and commercial
355

 
379

 
—

 
356

 
4

362

 
13

Mortgage, farmland
4,117

 
4,633

 
—

 
4,144

 
40

4,162

 
118

Mortgage, 1 to 4 family first liens
6,052

 
7,955

 
—

 
6,108

 
8

6,124

 
22

Mortgage, 1 to 4 family junior liens
—

 
248

 
—

 
—

 
—

—

 
—

Mortgage, multi-family
101

 
213

 
—

 
103

 
—

123

 
—

Mortgage, commercial
1,871

 
2,702

 
—

 
1,888

 
10

1,980

 
29

Loans to individuals
—

 
14

 
—

 
—

 
—

—

 
—

 
$
15,662

 
$
20,997

 
$
—

 
$
16,110

 
$
78

$
16,619

 
$
237

 
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance recorded:
 

 
 

 
 

 
 

 
 

 

 
 

Agricultural
$
341

 
$
341

 
$
341

 
$
464

 
$
7

$
491

 
$
21

Commercial and financial
1,635

 
1,670

 
1,008

 
1,607

 
21

1,715

 
67

Real estate:
 
 
 
 
 
 
 
 
 
 
 
 

Construction, 1 to 4 family residential
—

 
—

 
—

 
—

 
—

—

 
—

Construction, land development and commercial
—

 
—

 
—

 
—

 
—

—

 
—

Mortgage, farmland
—

 
—

 
—

 
—

 
—

—

 
—

Mortgage, 1 to 4 family first liens
1,593

 
1,700

 
62

 
1,613

 
12

1,529

 
36

Mortgage, 1 to 4 family junior liens
84

 
84

 
3

 
86

 
1

89

 
3

Mortgage, multi-family
—

 
—

 
—

 
—

 
—

—

 
—

Mortgage, commercial
71

 
71

 
1

 
72

 
1

73

 
3

Loans to individuals
2

 
2

 
2

 
2

 
—

2

 
—

 
$
3,726

 
$
3,868

 
$
1,417

 
$
3,844

 
$
42

$
3,899

 
$
130

 
 
 
 
 
 
 
 
 
 
 
 
 
Total:
 

 
 

 
 

 
 

 
 

 

 
 

Agricultural
$
1,865

 
$
2,348

 
$
341

 
$
1,999

 
$
8

$
2,102

 
$
25

Commercial and financial
3,176

 
4,372

 
1,008

 
3,482

 
36

3,866

 
118

Real estate:
 

 
 

 
 

 
 

 
 

 

 
 

Construction, 1 to 4 family residential
101

 
144

 
—

 
101

 
—

106

 
—

Construction, land development and commercial
355

 
379

 
—

 
356

 
4

362

 
13

Mortgage, farmland
4,117

 
4,633

 
—

 
4,144

 
40

4,162

 
118

Mortgage, 1 to 4 family first liens
7,645

 
9,655

 
62

 
7,721

 
20

7,653

 
58

Mortgage, 1 to 4 family junior liens
84

 
332

 
3

 
86

 
1

89

 
3

Mortgage, multi-family
101

 
213

 
—

 
103

 
—

123

 
—

Mortgage, commercial
1,942

 
2,773

 
1

 
1,960

 
11

2,053

 
32

Loans to individuals
2

 
16

 
2

 
2

 
—

2

 
—

 
$
19,388

 
$
24,865

 
$
1,417

 
$
19,954

 
$
120

$
20,518

 
$
367

Information regarding impaired loans as of December 31, 2018 is as follows:

 
Recorded
Investment
 
Unpaid Principal
Balance
 
Related
Allowance
With no related allowance recorded:
(Amounts In Thousands)
Agricultural
$
1,395

 
$
1,663

 
$
—

Commercial and financial
1,650

 
2,503

 
—

Real estate:
 

 
 

 
 

Construction, 1 to 4 family residential
111

 
148

 
—

Construction, land development and commercial
328

 
344

 
—

Mortgage, farmland
3,612

 
4,071

 
—

Mortgage, 1 to 4 family first liens
6,089

 
7,819

 
—

Mortgage, 1 to 4 family junior liens
—

 
254

 
—

Mortgage, multi-family
145

 
213

 
—

Mortgage, commercial
1,871

 
2,486

 
—

Loans to individuals
—

 
14

 
—

 
$
15,201

 
$
19,515

 
$
—

 
 
 
 
 
 
With an allowance recorded:
 

 
 

 
 

Agricultural
$
1,065

 
$
1,229

 
$
479

Commercial and financial
2,512

 
2,512

 
1,189

Real estate:
 

 
 

 
 

Construction, 1 to 4 family residential
698

 
698

 
4

Construction, land development and commercial
—

 
—

 
—

Mortgage, farmland
—

 
—

 
—

Mortgage, 1 to 4 family first liens
899

 
974

 
70

Mortgage, 1 to 4 family junior liens
24

 
24

 
2

Mortgage, multi-family
7,447

 
7,447

 
305

Mortgage, commercial
75

 
75

 
1

Loans to individuals
64

 
64

 
64

 
$
12,784

 
$
13,023

 
$
2,114

 
 
 
 
 
 
Total:
 

 
 

 
 

Agricultural
$
2,460

 
$
2,892

 
$
479

Commercial and financial
4,162

 
5,015

 
1,189

Real estate:
 

 
 

 
 

Construction, 1 to 4 family residential
809

 
846

 
4

Construction, land development and commercial
328

 
344

 
—

Mortgage, farmland
3,612

 
4,071

 
—

Mortgage, 1 to 4 family first liens
6,988

 
8,793

 
70

Mortgage, 1 to 4 family junior liens
24

 
278

 
2

Mortgage, multi-family
7,592

 
7,660

 
305

Mortgage, commercial
1,946

 
2,561

 
1

Loans to individuals
64

 
78

 
64

 
$
27,985

 
$
32,538

 
$
2,114



Impaired loans decreased $8.60 million from December 31, 2018 to September 30, 2019.  Impaired loans include any loan that has been placed on nonaccrual status, accruing loans past due 90 days or more and TDR loans.  Impaired loans also include loans that, based on management’s evaluation of current information and events, the Company expects to be unable to collect in full according to the contractual terms of the original loan agreement.  Impaired loans were 0.73% of loans held for investment as of September 30, 2019 and 1.06% as of December 31, 2018.  The decrease in impaired loans is due to a decrease of $7.83 million in loans with a specific reserve, a decrease in TDR loans of $0.55 million, a decrease in nonaccrual loans of $0.64 million, and is offset by a $0.43 million increase in 90 days or more accruing loans from December 31, 2018 to September 30, 2019.

The Company regularly reviews a substantial portion of the loans in the portfolio and assesses whether the loans are impaired in accordance with ASC 310.  If the loans are impaired, the Company determines if a specific allowance is appropriate.  In addition, the Company's management also reviews and, where determined necessary, provides allowances for particular loans based upon (1) reviews of specific borrowers and (2) management’s assessment of areas that management considers are of higher credit risk, including loans that have been restructured.  Loans that are determined not to be impaired and for which there are no specific allowances are classified into one or more risk categories. Based upon the risk category assigned, the Company allocates a percentage, as determined by management, for a required allowance needed.  The determination of the appropriate percentage begins with historical loss experience factors, which are then adjusted for levels and trends in past due loans, levels and trends in charged-off and recovered loans, trends in volume growth, trends in problem and watch loans, trends in restructured loans, local economic trends and conditions, industry and other conditions, and effects of changing interest rates.

Specific allowances for losses on impaired loans are established if the loan balances exceed the net present value of the relevant future cash flows or the fair value of the relevant collateral based on updated appraisals and/or updated collateral analysis for the properties if the loan is collateral dependent.  The Company may recognize a charge off or record a specific allowance related to an impaired loan if there is a collateral shortfall or it is unlikely the borrower can make all principal and interest payments as contractually due.

For loans that are collateral dependent, losses are evaluated based on the portion of a loan that exceeds the fair market value of the collateral.  In general, this is the amount that the carrying value of the loan exceeds the related appraised value less estimated costs to sell the collateral.  Generally, it is the Company’s policy not to rely on appraisals that are older than one year prior to the date the impairment is being measured.  The most recent appraisal values may be adjusted if, in the Company’s judgment, experience and other market data indicate that the property’s value, use, condition, exit market or other variable affecting its value may have changed since the appraisal was performed, consistent with the December 2006 joint interagency guidance on the allowance for loan losses.  The charge off or loss adjustment supported by an appraisal is considered the minimum charge off.  Any adjustments made to the appraised value are to provide an additional charge off or specific reserve based on the applicable facts and circumstances.  In instances where there is an estimated decline in value, a specific reserve may be provided or a charge off taken pending confirmation of the amount of the loss from an updated appraisal.  Upon receipt of the new appraisals, an additional specific reserve may be provided or charge off taken based on the appraised value of the collateral.  On average, appraisals are obtained within one month of order.